MINUTES

Industry Chair Joe Lubenow and Postal Vice Chair Ann Wright called the meeting to

order, and welcomed members and guests. Joe announced the Graphic Communications Association as the newest addition to MTAC which will be represented by Peter Moore and

Russ Shores. He mentioned that the association executive for Printing Industries of America

is Ben Cooper and that Mike Colestock and Andy Roussel will be new representatives. Dee

Adona was recognized for her years of service as the USPS Program Manager for MTAC and

Joe thanked her on behalf of the entire membership.

Thom Roylance reviewed efforts of the Communications Committee and welcomed new members as follows: Mike Colestock (who as mentioned will represent PIA), Carla Harding (who represents Association of American Publishers), Joyce Bagby (who represents Association of Priority Mail Users), Wanda Radgowski (who represents National Association of Advertising Distributors), Brent Thomas (who represents Mail Order Gardening Association), Mark Patterson (who represents Saturation Mailers’ Association), and Tom Dawson (who represents Check Payment Systems Association – formerly the Financial Stationers’ Association). It was announced that the Mailing & Fulfillment Service Association (MASA) has changed its name and will be called instead the Mailing & Fulfillment Service Association (MFSA). It was also announced that the Newsletter Publishers Association has become the Newsletter & Electronic Publishers Association..

Jack Widener, Steering Committee Representative and Joyce McGarvy, Industry Work Group Leader reported on the following:

Bob Galaher gave us examples of the "Check List" that will be used on the workroom floor. The "Check List" will be available on the web page.

The information that is gathered on the workroom floor will be entered into the website from the hard copy of the "Check List". Eventually we would hope to enter the information via a hand held computer. Some of the items to be entered will include:

1. The name of the mail owner
2. The name of the mail preparer
3. Who collected the information

We will be able to view reports by postal facility as well as by mail preparer of mail owner.

There will be a pilot test at the P&DC Washington D.C in May. The test will expand to the P&DC Portland in late summer.

We discussed several options to identify the mail owner and mail preparer. One option for Standard mail is to place a mail preparer’s id in the optional endorsement line. Periodicals mailers could include the name of the printer in the required id statement.

Most of the meeting was spent discussing the testing of the complaints page. Some of the issues were:

1. The system times out
2. Locking up of the program
3. In some instances the verify address option freezes
4. The users would like the ability to print the screen that verifies the address

There will be a pilot test for the ePubwatch in the Great Lakes and the New York area.

Guidelines are being written for the delivery units and it will be available on line.

As the USPS replaces some of their old computers with new ones; the old ones are being given to non-duc sites. As time goes by those non-duc sites will be added to the ePubwatch program.

John Nolan reviewed the Postal Service revenue assurance policy as follows:

PURPOSE - to ensure that all revenues due to the USPS are collected fairly and consistently.

1. It is our policy to emphasize prevention over penalty in our revenue deficiency dealings with mailers. We will write clear instructions and regulations and apply them consistently over time and location.
2. It is our intent to put the greatest possible emphasis on internal quality. We will institute programs and reviews that ensure that mail is accepted correctly, that all employees receive appropriate training, that systems are designed and implemented with the intent to eliminate problems before they occur, and that we deal with customers in a cooperative manner to improve quality on both sides.
3. We will promote honest dealings with all customers, treating all mailers as valued customers but ensuring that each pays what is due so that all benefit. We will share information and promote continuous two-way communication. We will ensure that all USPS personnel maintain professional work standards and promote an atmosphere of mutual respect with mailers. We will encourage all mailers to make use of our consultation services before mailing in order to minimize or eliminate problems that occur at or after acceptance.
4. The necessary implementation of a revenue assurance review program will include sharing work plans and direction with mailers ahead of the fact, making all tools utilized by reviewers accessible to mailers, and communicating the generalized results of reviews to the mailing community so that quality improvements can be instituted as a result.
5. We will maintain certain specific criteria in pursuing revenue shortfalls:

· we will not normally go back more than one year to assess deficiencies:

· we will normally adhere to a $500 threshold in assessing deficiencies;

· we will provide prior notification on content issues;

· there will normally be the opportunity to fix a problem at or before acceptance; and

· the mailer will have the opportunity to appeal a revenue deficiency assessment to a higher level.

6. We will aggressively pursue any and all cases of suspected fraud in the payment of postage and fees.

Much discussion followed including questions and answers.

Attn: Nora Taylor

US Postal Service eCommerce

475 L’Enfant Plaza SW Rm 5142

Washington DC 20260-5142

Laine Ropson, Industry Steering Committee Representative, provided the following report :

Clarence Banks, Industry Steering Committee Representative, presented the following report:

The Work Group met April 11, 2001 at the Washington DC PD & C. One of the key topics dicussed was the flats collator test. Ralph Moden gave the MTAC Group an overview of the test.

Other topics discussed were:

1. Characteristics study – the pilot test has been completed. Early findings show that the AFSM 100 is tearing covers in certain situations. It was also reported that static charged bundles are creating machine jams. Mailers generally charge bundles to hold the pieces in place until they can be strapped or shrinkwrapped. It was also reported that excessive glue on address labels create machine jams. The excessive glue appears to be a quality related issue at the mailer.
2. ID Tags – It was reported that the USPS is exploring the feasibility of using ID codes on flat mail to help reduce cost. Some of the options involve using white labels on the covers and applying a barcode. The barcode could be invisible or visible. Mailers interested in working with the USPS on developing the ID tag were asked to contact Clarence Banks. It was also

suggested that MTAC consider adding ID tags on a future agenda.

3. Improving readability – A task group has been working to develop a brochure to give mailers some guidelines on addressing flat mail pieces for maximum readability. The goal is to decrease manual processing when a barcode can not be read. The task group has also developed a communications plan for getting this information to mailers. This is another suggested topic for the MTAC agenda.

4. DDU/Drop Shipment Service Assessment for Parcel Workgroup

Peter Moore, Industry Steering Committee Representative provided the following report:

MTAC Postal Vice Chair Pat McGee and Industry Vice Chair Bob O’Brien opened the meeting and introduced Dick Strasser.

Richard J. Strasser

Much discussion followed the presentation with many opportunities for questions and answers

Deborah K. Willhite

SVP, Government Relations

& Public Policy

Deborah Willhite reviewed the following:

• fact that with the USPS Board of Governors (BOG) calling for postal reform there has been much activity

• the BOG’s call for review of five day service certainly got everyone’s attention

• Comptroller General David Walker has advised that the GAO has added USPS activities to its "high risk" list and this is a positive development

• Rep. Dan Burton, chairman of the House Committee on Government Reform, has written to the President asking for support and leadership on postal reform

• Issue is not management but rather law under which we operate is outdated and change is needed now rather than later

• Collective bargaining and binding arbitration is one key to process and needs to be addressed with open dialogue

• Full oversight committee chaired by Senator Thompson will meet May 15 and our team will want to work with them and the various coalitions to confirm where we agree and where we disagree

• We are not looking to write legislation but rather to give the Postal Service flexibility to be the best postal service in the world

• Ways to go include a "clean slate" approach ("If you had a "clean slate" what would you ask for? per Chairman Burton which would entail writing in broad terms rather than in detailed legislative fashion) and/or possible modifications to HR 22 such as including labor (which was not done the last time around), considering a price cap regime, etc.

• What we want from the White House is a point person as it is unlikely there will be a presidential commission

• It is now time to confirm what will work and what won’t so we can get passage before the "11^th hour"

• We should be optimistic. The key is that we now have a great opportunity to get regulatory reform if we can get agreement on key issues and don’t let disagreements become "show stoppers"

• There have already been significant changes over the past three years with new ideas now being considered and with the BOG and the Management Committee aligned regarding our objectives for postal reform so necessary to enable us to operate effectively in the marketplace

• Critical next steps are appointment of the next PMG (the White House has met with Bill Henderson on this), continued work by us with the Hill working with the various coalitions, and preparation of the policies for the next PMG

Much discussion followed with questions and answers as follows:

• In response to whether MTAC’s input regarding postal reform will be welcomed the answer was "yes".

• Regarding the usefulness of a "Kappel" type commission to help make postal reform a reality the answer was "no" as we, and chairman Burton, feel regulatory reform is needed now and we don’t need to wait.

• As for why it is so difficult to close a post office the answer is that the law says we cannot just do it.

• While recognizing that rate flexibility is a key issue we have not locked into any specific definition of what this would be. However, a quid pro quo will be important in the negotiations. We understand the possibilities that there could be a relaxation of the monopoly, that there will still be a need for universal service, that pricing flexibility must enable us to also control costs (especially labor), etc.

• In response to whether a rebound in the current poor economy would ease the need for postal reform it is felt that this would not be the case.

Anita Pursley, Steering Committee Representative, provided the following:

Standard Mail Workgroup update

The Workgroup is just getting off the ground. DOA policy appeared in a March Postal Bulletin which will be taken into consideration as it relates to in-home instructions.

Ralph Moden and Mike Spates have decided to present a proposal to the workgroup within the next week or two. Once that is received, the workgroup will convene a meeting or at a minimum, a teleconference. If the proposal is acceptable, the group will discuss placement.

Alan Kline reported that the workgroup identified two significant issues:

1. Is there anything in the law that prohibits us from doing this? They have been told "no".
2. Is this feasible? via Postal One?

Alan was promised a letter (with a reply to the second issue) in time for his MTAC report but, unfortunately, it did not arrive. Since the meeting, Pat Imes indicated that this letter will be sent to all members of MTAC.

Briefing for PostalOne and Mail.dat not yet available for distribution.

John Rapp

VP Delivery

John reviewed the fact that the USPS Board of Governors has instructed USPS management to study the 5 day delivery issue and to report back within 90 days. He emphasized that no decisions have been made and we want industry input. The key is to ascertain how this change would impact association members, and if it was decided to actually implement 5 day delivery, then how would this be done.

Four break outs were then provided for group discussion as follows:

Standard Mail – Ben Franklin Room

First-Class Mail – Room 10 107

Periodicals – Room IP 609

Packages – Room 8621

Notes from each of the discussion leaders for these four groups are as follows:

• It would be beneficial to the members of the MTAC if there was 5-day residential delivery for the USPS to consider 6-day business delivery.

• There is a concern that time sensitive mail will not be delivered within the effective time.

• Consistency of delivery is a concern. Mailers are concerned that 5-day operations would result in undue delays and backlogs in volume handling in both the facilities, BMEU, and in post offices. This concern is compounded by the prospects of holiday weeks where normal mail flow would be negatively impacted. This operational change could effectively cause storage and staging space issues for the mailers because many times they operated 7 days a week. This could have a negative effect on production schedules for mailers.

• 5-day operations would result in a reduction of competitive advantage for many mailers.

• 5-day operations might result in a reduction in the normal pick-up and or collections schedules.

• Abbreviated Sunday operations and subsequent cutbacks would negatively effect "day certain delivery".

• Standard mail now is perceived to have only a 4-day delivery window (because Mondays the post offices are cleaning up from the weekends, and Tuesday is regarded as "ADVO" day). Under a 5-day operation scenario, standard mail will now be perceived to be relegated to a 3-day delivery window.

• How are post offices going to deliver 6 days worth of mail in 5 days? This scenario would impose compressed flexibility for both the mailers and USPS.

• 5-day operations scenario will have negative effects on ‘drop shipment’ arrangements.

• 5-day operations scenario will have negative effects on retail sales operations arrangements. It was suggested that the USPS consider, if a 5-day operation scenario was adopted, that a 24 hour 5-day drop shipment operation be established to allay any problems with movement of Standard A mail.

• At the present time the mailing industry feels there is a day of cushion in the mailing patterns for "day certain" mail. This cushion protects them from mail volume overload in the USPS mail streams but will be lost under a 5-day operation scenario.

• Standard A business advertising may be diverted to other avenues for timely messaging, otherwise competitive advantages could be lost. If predicting ‘In-Home’ delivery gets any more difficult, diversion may be required to maintain competitive balance.

• Cost and effect of the proposed operational change has not been defined, i.e., will this delay or eliminate any future rate increases?

• USPS needs to meet customer need, which is consistent service. A reduction of 1 day of delivery is counter- productive.

• The USPS should consider 7-day delivery, which could prove to be an advantage from a business perspective.

• The USPS should investigate optimizing the use of current equipment, such as 7-day operations, because reduction to 5-day operations may require more equipment to process the current level of mail volume. This could even lead to multiple deliveries of mail per day.

• Under the 5-day scenario, special event mail (such as political mail in an election year) may be a heightened problem.

• Consistency and timely delivery would improve if color-coding standards were maintained all the way to delivery.

• USPS should investigate foreign authorities that have changed to 5-day operations.

• If the USPS goes to a 5-day scenario, future rate increases will hurt credibility.

• Reduction in Force is the biggest one cost reducing avenue, but with "No Lay Off" clauses it would have to be a phased in process rather than something that could be immediately implemented. How is the USPS going to accomplish the cost savings from complement reduction?

• If the USPS reduces complement now, and circumstances change, how likely is it the USPS would be able hire in the future given the difficulty in hiring now?

KEEP IN MIND

• Re: remittance mailers; a significant dollar charge to mailers, which will reduce the value of the USPS

• Laws regarding credit card industry that relate to timliness
• Want to be able to pick-up 7x24
• Regulatory issues
• SEC T+3
• Days from billing cut-off
• Insurance Industry – cancellation of policy

• Must provide some services on the "shutdown" day
• Box
• Caller pick-up
• BMEU

• Must be able to give mail to USPS 7-day

• Call center load on Saturday related to the arrival of bills
• Relative to legal issues, Saturday is better than M-F
• A consumer who receives a bill on Saturday and is likely to pay that day, may defer payment for a week
• Other opinion – Tuesday is better
• What about diversion to eMail and eCommerce – are you looking into it?
• Five-day would very likely speed up diversion
• Would change the public’s perception of the Postal Service – to a "sometime" rather than "universal" service
• Postal Service has always been there – a rock – while around us there has been all this change re: utilities, phones, etc
• Although agree with controlling costs; the negatives of 5-day are such that other alternatives may be better – such as cluster boxes, …
• Delivery on "former holidays" to maintain a 5-day minimum would be confusing
• Concern that reliability of meeting service standards will be even worse
• Keep in mind government users
• USDA
• VA
• SSA
• FBI
• Courts

NEGATIVES

• My industry must work 7x24; processing, transportation and logistics just to keep up
• A FCM service bureau would loose revenue; customers would go elsewhere
• If take away Tuesday, five-day work-week processes would have a "lost" day that would still cost us the workhours of a 40-hour per week employee
• Business communications would be driven to electronics
• Difficulty in handling the bulge in workload to businesses on the day-after
• Mail that must be "signed-for" will be very difficult if not impossible if USPS does not deliver on Saturday (only time people are likely to be home)
• No Saturday delivery would "kill" many FCM marketing programs
• Newspapers would love it

POSITIVES

• Dollar savings, if it actually leads to lower rates
• Five-day may match up better with the 5-day work week
• In higher education, it would not be a big dilemma—would just not need to work on Saturday
• None

• Service for Time Sensitive Publications

• Is Overall Service Impacted?

• Different impacts for Monthly Publications and Weeklies

• Consistency – All mailers want it

• Any USPS changes will impact the industry

• Return to Five Regions

• Periodical Mailers will be required to make Transportation Changes -- this will cause a diversion

• Using results from current Mondays, the system cannot handle volumes

• Monthly publications: Concerns with Density and Saturation – impacts to publishers if two monthlies arrive on the same day.

• Additional costs to mailers based on changes that will be required that will affect Editorial / Production and Transportation costs.

• Poor USPS delivery may force shift to newsstand

• Is this a one-shot deal?

• Has USPS considered delivery (or restriction of delivery) for a specific day by class of mail?

• Consistent delivery on weekends critical to Rural areas on weekends

• USPS will force diversion to Alternate delivery methods

• Does USPS have any contractual obligations? Will it be too much for one carrier to handle?

• One less delivery day will eliminate the need for most replacements and may reduce inefficiencies.

• What are the impacts on promotional mailings of other classes?

• USPS must improve consistency

• Can USPS Link changes with a measurement system?

• Timeliness – Saturday Delivery is critical for many weeklies

• Will USPS compress or control acceptance/entry

• Local Newspapers have cooperative marketing/advertising programs

Will we be able to meet established service standards?

Will service standards change?

• There is a need to grow the business and increase revenue. This will improve the bottom line
• The competitive advantage of the Postal Service is weakened
• Cutting service may produce wrong public perception, from a 2^nd rate business to a 3^rd rate business
• Working customers are not at home during the week
• Mailers target Saturday for delivery because it is the most probable day to find someone at home

• How will we handle peak mailing season volume?

How can we avoid delivery tails?

• Capacity issues are a concern
• Mailing industry has an operational window that may be in some cases inflexible
• Different day of the week has a different impact based on the mailing season

Mailing season peaks will have a dramatic effect

• Business to business will be hurting if we curtail a day during the week
• Business to residential will have less of an impact if we curtail Sat.

If mail doesn’t move:

Mailers need to be able to pick up their remittance mail

Mailers ability to maximize their transportation logistics will be impacted

Outbound vehicles will have to return home empty on one day of the week

• Reduces the mailers’ ability to allow customers to shop for the best price. It reduces the competitive advantage of the USPS. Especially since there is currently no additional charges for the residential customer
• If Priority Mail is not delivered on Sat, mailers will find an alternate delivery service

• Concerns about whether drop shipments will be affected due to the lack of capacity within the Plants

This may be detrimental to the mailing industry

• This would impact the ability for trailers to schedule time for making drops at the BMC

• Reducing service on any day will negatively affect mailer

20% of the products sent out come back.

If a customer doesn’t return the product the first Sat, they may not process it until next Sat.

• This lengthens the time for both mailer and customer
• Only reduce service if there is a compelling labor reduction that can be accomplished
• Increased cost to mailers because they will have to buy more equipment (trailers) to store mail in due capacity issues
• Increase in level of frustration

In this scenario both mailers and USPS losses

• There is a need to keep mail order rates low, so that mail order is an attractive option

• Look for things that take cost away from the business

• Main concern is service

Why are there delivery tails (mail takes 4 days to arrive instead of 3)?

• Let’s not use a temporary fix to kill the industry long term
• If it will result in consistent delivery it will be a plus
• If it will improve the financial viability long term it would be worthwhile
• If it is only a Band-Aid fix, don’t do it
• Certain segments may be able to live a reduced delivery scenario

Need to be careful in considering the impact of selective delivery, it may be problematic

• Is there a possibility that USPS could partner with another delivery service in providing service on SUN?
• Why not explore continuous improvement of the operational efficiencies as a way of controlling cost rather than sacrificing your competitive advantage by eliminating Saturday

Suggestions

Premium product opportunity for day specific delivery

• A two day product (guaranteed) may be attractive – To compete with competition
• Why not use expedited network for various levels of service (priority, for instance)
• How about a flexible workforce, so that the USPS can stagger the work week

Sun – Thu Wed – Sun

4 day of 10 hours or 3 day of 12 hours

• Anything that would allow your workforce to be more flexible and lower labor cost
• Instead of cutting a day maybe the USPS should add a day and install a flexible workforce
• Potential opportunity to enter the return shipper business

Other issues

• If no reductions in the labor force, studying this alternative is a moot point
• Where specifically will the savings come from?

Operations will still have the same processes, same mail to deliver

• Instead of the other way around, USPS should reduce cost and improve service
• Knowing what parts of the business will be affected would allow mailers to provide more accurate feedback